Kevin McKenzie argued that funds in his Bank of Scotland account could not be lawfully arrested as his sole income was derived from benefits. It was the position of the respondent that the payments ceased to be protected once they entered the bank account as the bank was the present owner of the funds.

The application was heard by Sheriff Donald Corke. Boffey, advocate, appeared for the applicant and Tosh, advocate, for the respondent.

Underlying purpose

On 23 May 2022, a summary warrant was granted to the council authorising the recovery of Mr McKenzie’s unpaid council tax. An arrestment was served on the Bank in the sum of £527.59 on 28 October 2022. At the relevant time, the protected minimum balance under section 73F of the Debtors (Scotland) Act 1987 was £566.51 and there was no competent application before the court to find the arrestment to be unduly harsh.

The applicant sought recall of the arrestment on the ground that all money within the bank account was due to him by the Department for Work and Pensions, so this was an unlawful arrestment under section 187 of the Social Security Administration Act 1992. A letter and schedule from Jobcentre Plus was lodged with the application confirming he was in receipt of Universal Credit and Personal Independence Payment.

At the initial hearing it was argued by the council that as a matter of law such funds ceased to be protected, save for the statutory minimum, once they were paid into a bank account. However, the applicant’s position was that a 2007 Sheriff Court decision, North Lanarkshire Council v Crossan, heavily relied upon by the council had been overturned in an unpublished appeal judgment.

For the applicant it was submitted that the UC and PIP payments were inalienable against creditors, having regard to the underlying purpose of social security benefits and the intention of Parliament to protect the person in need. Counsel for the respondent argued that the funds were owned by the bank, which was merely obliged to account to a customer for a sum equivalent to their credit balance, thus the arrestment served on the Bank did not attach Mr McKenzie’s entitlement to the monies.

An intervention in the case made by the Bank, which expressed concerns that if the applicant was correct it would impose an onerous obligation on it to trace the origin of any funds subject to an arrestment.

Protection of statute

In his decision, Sheriff Corke said of the Sheriff Appeal Court decision overturning Crossan: “Although the judgment of Sheriff Principal Kearney is from another Sheriffdom and hence not binding upon this court as a decision of the Sheriff Appeal Court nowadays would be, I do find it to be persuasive and I rely on it insofar as relevant. The decision of the Sheriff had initially been urged upon me as persuasive. By the time the case was argued the second time, the position of the council was that the Sheriff had reached the correct result but that her analysis was wrong.”

He continued: “Neither the council nor the Bank can dispute that Mr McKenzie subsists by way of these benefits. That is the nature of these benefits. The council obtained a summary warrant that they should not have sought if incompetent or irregular, as it appears on the face of the application for recall to be. The Bank have intervened against the interests of their own customer, yet have not stated he is wrong as to the source of the funds being paid into his account.”

Addressing the effect of the statutory provisions, the sheriff said: “It cannot have been the purpose of statutory provisions such as section 187 of the SSAA 1992 simply to save the DWP from the inconvenience of having funds arrested in its hands. It is no protection at all to the individual if the benefit has to be paid into a bank account and the statutory protection flies off as soon as it leaves the DWP. The DWP could itself face difficulties if demand grows for payment of benefits in a form not subject to arrestment.”

He concluded: “How these schedules are dealt with administratively cannot be a reason to deny benefit claimants the protection offered by statute. The responsibility rather lies upon the creditor not to use summary warrants to the detriment of those deemed to require protection. If the Bank has laid itself open to criticism or action for their part in implementing arrestments, that is not relevant to a consideration of the instant case.”

The sheriff therefore ruled that the applicant was entitled to recall of the arrestment.